We expect to receive net proceeds of approximately $569.0 million from the sale
of 24,000,000 common units offered by this prospectus, after deducting the
underwriting discounts and commissions, offering expenses and structuring fees
payable by us. We intend to use the net proceeds of this offering in the
following manner:
• $255.0 million to repurchase the 10.875% senior secured notes due 2017
issued by Coffeyville Resources (the “Second Lien Notes”) and pay
associated accrued interest;
• $160.0 million to prefund certain maintenance and environmental capital
expenditures through 2014;
• $55.0 million to fund the turnaround expenses of our Wynnewood refinery in
the fourth quarter of 2012; and
• $99.0 million for general purposes.
Pursuant to the Reorganization Agreement, Coffeyville Resources, on behalf of
CVR Refining Holdings, will, if necessary, contribute to us an amount of cash
such that we will have approximately $340 million of cash on hand at the closing
of this offering, including the proceeds of this offering (other than the $255.0
million used to repurchase the Second Lien Notes). If such amount of cash on
hand at the closing of this offering exceeds $340 million, we will distribute
the excess to Coffeyville Resources.
The net proceeds from any exercise of the underwriters’ option to purchase
additional common units (approximately $85.1 million if exercised in full) will
be used to make a distribution to CVR Refining Holdings. If the underwriters do
not exercise their option to purchase additional common units, we will issue
3,600,000 common units to CVR Refining Holdings at the expiration of the option
period. If and to the extent the underwriters exercise their option to purchase
additional common units, the number of units purchased by the underwriters
pursuant to such exercise will be issued to the public and the remainder, if
any, will be issued to CVR Refining Holdings. Accordingly, the exercise of the
underwriters’ option will not affect the total number of units outstanding.

We compete primarily on the basis of price, reliability of supply, availability
of multiple grades of products and location. The principal competitive factors
affecting our refining operations are cost of crude oil and other feedstock
costs, refinery complexity, refinery efficiency, refinery product mix and
product distribution and transportation costs. The location of our refineries
provides us with a reliable supply of crude oil and a transportation cost
advantage over our competitors. We primarily compete against five refineries
operated in the mid-continent region. In addition to these refineries, we
compete against trading companies, as well as other refineries located outside
the region that are linked to the mid-continent market through an extensive
product pipeline system. These competitors include refineries located near the
Gulf Coast and the Texas panhandle region. Our competition also includes
branded, integrated and independent oil refining companies, such as BP,
Phillips 66, HollyFrontier, NCRA, Valero, Flint Hills Resources, CHS and Shell.

Company Description

We are an independent downstream energy limited partnership with refining and
related logistics assets that operates in the mid-continent region. We own two
of only seven refineries in the underserved Group 3 of the PADD II region of the
United States. We own and operate a 115,000 barrels per day

(“bpd”) complex full
coking medium-sour crude oil refinery in Coffeyville, Kansas and a 70,000 bpd
medium complexity crude oil refinery in Wynnewood, Oklahoma capable of
processing 20,000 bpd of light sour crude oils (within its 70,000 bpd capacity).
In addition, we also control and operate supporting logistics assets including
approximately 350 miles of owned pipelines, over 125 owned crude oil transports,
a network of strategically located crude oil gathering tank farms, and over
6.0 million barrels of owned and leased crude oil storage capacity. The
strategic location of our refineries, combined with our supporting logistics
assets, provide us with a significant crude oil cost advantage relative to our
competitors. Furthermore, our Coffeyville and Wynnewood refineries are located
approximately 100 miles and 130 miles, respectively, from the crude oil hub at
Cushing, Oklahoma, and have access to inland domestic and Canadian crude oils
that are priced based on the price of West Texas Intermediate crude oil (“WTI”).
In the nine months ended September 30, 2012, the crude oil consumed at the
refineries was at a discount to the price of WTI of $2.81 per barrel.
Our refineries’ complexity allows us to optimize the yields (the percentage of
refined product that is produced from crude oil and other feedstocks) of higher
value transportation fuels (gasoline and diesel). Complexity is a measure of a
refinery’s ability to process lower quality crude oil in an economic manner. Our
two refineries’ capacity weighted average complexity is 11.5. As a result of key
investments in our refining assets, our Coffeyville refinery’s complexity
increased to 12.9 in 2012 from 10.3 in 2005. Our management team, which joined
us in 2005 in connection with the Coffeyville refinery acquisition, has also
achieved significant increases in this refinery’s crude oil throughput rate
since the acquisition. Our Wynnewood refinery, which we acquired in December
2011, currently has a complexity of 9.3, and we expect to spend approximately
$50 million on a hydrocracker project that will increase the conversion
capability and the ultra-low sulfur diesel (“ULSD”) yield of the refinery. In
addition, we have increased the Wynnewood refinery’s utilization rate from
approximately 88% for the year ended December 31, 2011 to approximately 93%
during the nine months ended September 30, 2012. A refinery’s utilization rate
refers to average daily crude oil throughput divided by crude oil capacity
(which represents the stated refining capacity of the refinery), excluding
planned periods of downtime for maintenance and turnarounds.
We currently gather approximately 50,000 bpd of price-advantaged crudes from our
gathering area, which includes Kansas, Nebraska, Oklahoma, Missouri and Texas.
In aggregate, these crudes have been sourced at a discount to WTI because of our
proximity to the sources of crude oil, existing logistics infrastructure and
quality differences. We also have 35,000 bpd of contracted capacity on the
Keystone and Spearhead pipelines that allows us to supply price-advantaged
Canadian and Bakken crudes to our refineries.
Since the beginning of 2011, WTI crude has priced at a considerable discount to
the price of Brent crude oil (“Brent”). Other imported waterborne crude oils,
and crude oil produced on-shore and off-shore in the Gulf Coast region are
priced based on the price of Brent. This price advantage for the crudes that we
refine is the result of increasing mid-continent domestic and Canadian crude oil
production, decreasing North Sea production, economic transportation
infrastructure limitations, and geopolitical factors. We expect WTI to continue
to trade at a discount to Brent over the long term, but anticipate that this
discount will vary over time. For example, the recent reversal of the Seaway
crude oil pipeline to make it flow from Cushing to the Gulf Coast and the
ongoing and planned capacity expansion of the pipeline will ameliorate some of
the current transportation infrastructure limitations by increasing
mid-continent producers’ ability to transport crude oil to Gulf Coast refiners
in an economic manner and may reduce the robust Brent-WTI price differential.
Over time, continued increases in mid-continent domestic and Canadian crude oil
production, ongoing infrastructure constraints that limit the amount of crude
that can be transported through the more economic pipeline network as opposed to
rail or truck and continuing decline in North Sea production should continue to
support wider Brent-WTI price differentials.
The following table shows average crude oil price differentials of WTI as
compared to Brent, WTI to Mars Blend (“Mars”), Western Canada Select (“WCS”) to
WTI, West Texas Sour (“WTS”) to WTI, and WTI priced in Midland, Texas (“WTI at
Midland”) to WTI for the year ended December 31, 2011 and for the nine months
ended September 30, 2012.
Average Differential
($ per barrel)
Year Ended Nine Months Ended
December 31, 2011 September 30, 2012
WTI—Brent(1) $ (16.82 ) $ (17.12 )
WTI—Mars(1) (12.52 ) (11.84 )
WCS—WTI(1) (16.70 ) (20.75 )
WTS—WTI(1) (2.05 ) (4.09 )
WTI at Midland—WTI(1)(2) (0.52 ) (2.87 )
(1) NYMEX WTI, WTS, Mars, WCS and Brent average prices from Bloomberg over the
time periods stated above.
(2) WTI at Midland average prices from Argus Media over the time periods stated
above.
Our logistics businesses have grown substantially since 2005. We have grown our
crude oil gathering system from 7,000 bpd in 2005 to approximately 50,000 bpd
currently. The system is supported by approximately 350 miles of owned pipelines
associated with our gathering operations, over 125 crude oil transports and
associated storage facilities located along our pipelines and third-party
pipelines for gathering crude oil purchased from independent crude oil producers
in Kansas, Nebraska, Oklahoma, Missouri and Texas. We have a 145,000 bpd
pipeline system that transports crude oil from our Broome Station tank farm to
our Coffeyville refinery as well as a total of 6.0 million barrels of owned and
leased crude oil storage capacity, including approximately 6% of the total crude
oil storage capacity at Cushing. Crude oil is transported to our Wynnewood
refinery via two separate third-party pipelines operated by and received into
storage tanks at terminals located at or near the refinery. Our crude oil
gathering and pipeline systems provide us with price advantages relative to the
price of WTI.
Customers for our refined products primarily include retailers, railroads and
farm cooperatives and other refiners/marketers in Group 3 of the PADD II region
because of their relative proximity to our refineries and pipeline access. We
sell bulk products to long-standing customers at spot market prices based on a
Group 3 basis differential to prices quoted on the New York Mercantile Exchange
(“NYMEX”), which are reported by industry market related indices such as Platts
and Oil Price Information Service. We also have a rack marketing business
supplying product through tanker trucks directly to customers located in
proximity to our Coffeyville and Wynnewood refineries, as well as to customers
located at throughput terminals on refined products distribution systems run by
Magellan Midstream Partners L.P. (“Magellan”) and NuStar Energy, LP, (“NuStar”).
Rack sales are at posted prices that are influenced by competitor pricing and
Group 3 spot market differentials. Additionally, our Wynnewood refinery supplies
jet fuel to the U.S. Department of Defense. In addition, our Coffeyville
refinery sells a by-product of its refining operations, petroleum coke (“pet
coke”), to an affiliate, CVR Partners, LP (“CVR Partners”), pursuant to a
multi-year agreement. For the year ended December 31, 2011, our two largest
customers accounted for approximately 15% and 12% of our sales and approximately
64% of our sales were made to our ten largest customers.
We generated refining margin adjusted for FIFO impacts of $1,328.8 million, net
income of $540.7 million and Adjusted EBITDA of $988.9 million for the nine
months ended September 30, 2012. We generated refining margin adjusted for FIFO
impacts of $799.6 million and $1,404.3 million, net income of $480.3 million and
$618.2 million, and Adjusted EBITDA of $577.3 million and $1,013.3 million, for
the year ended December 31, 2011 and twelve months ended September 30, 2012,
respectively. Our results of operations include the historical results of
operations of the Wynnewood refinery only for periods following our acquisition
of the refinery on December 15, 2011. Pro forma for the acquisition of WEC (as
defined below) and the Transactions (as defined below) we would have generated
$1,225.7 million and $1,328.8 million of refining margin adjusted for FIFO
impacts, $749.0 million and $565.1 million of net income and $842.7 million and
$988.9 million of Adjusted EBITDA for the year ended December 31, 2011 and nine
months ended September 30, 2012, respectively.
-----
CVR Refining, LP was formed in Delaware in September 2012. Our principal
executive offices are located at 2277 Plaza Drive, Suite 500, Sugar Land,
Texas 77479, and our telephone number is (281) 207-3200. Upon completion of
this offering, our website address will be www.cvrrefining.com.

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